Last week, the Singapore Exchange took the unprecedented step of warning the public to be careful when trading shares of CEFC International. It noted that the stock has risen 10 times in a month and that it has been issued with a Trade with Caution notice recently. More relevantly, the exchange said its investigations show that 40 per cent of recent buying has come from a few overseas parties, a signal that something may not be quite right with the way the stock has performed.
Brokers I spoke to have wondered whether CEFC is another Blumont in the making; my view is that if it is, then the point to note is that SGX's actions have been prudent and prompt. It queried the company, received a negative response, then issued a TWC. It then went further to look at who was doing the buying, then saw fit to warn the public again. I think that's the best that can be expected in a buyer beware regime - after this, no one can blame the exchange for mishandling if the stock goes belly-up, or if the bubble suddenly bursts for whatever reason.